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Molten gold. Montreal-based gold miner Semafo Inc. has declared its first dividend on rising output in its West Africa operations. (Petr Josek/Reuters/Petr Josek/Reuters)
Molten gold. Montreal-based gold miner Semafo Inc. has declared its first dividend on rising output in its West Africa operations. (Petr Josek/Reuters/Petr Josek/Reuters)

Schizas' Mailbag

Semafo Inc. stuck in a long-term downtrend Add to ...

Lou,

I cashed in last week on your tip on NEM, thanks.

I am now looking at Semafo Inc. Any feedback on this would be appreciated

Thanks,

Brad



Hey Brad,



I am glad that my analysis of Neo Material Technologies in February of 2011 put the shares on your radar and that you were able to profit. But lets be clear – I don’t tip! I simply do the best I can to advise investors about the prospects for the stocks that are assigned to me by readers.

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The other side of the relationship I have with investors is that you have to conduct your own due diligence. Just because I post on a stock does not in anyway mean that you should go out and buy or sell it. At best my work should provide another view on shares you own, are thinking of owning, or might want to consider.

Having said that, this will be the fourth time I will have examined the chase for Semafo Inc. since May of 2009.

The analysis from Nov. 10, 2010 for Pierre, when the stock was trading for $12.28, indicated that the advance that started in May of 2009 was running out of steam. It was advised that it would be prudent to watch for a pull back, and boy did it ever. The shares have been in a prolonged retreat to their current level.

The last post was logged Dec. 7, 2011 for Greg. The stock was trading for $7.41 and although it looked like it was trying to form a base there was a caution brought to the attention of investors. It appeared that a descending triangle was forming which indicated that there would be more selling to follow. Unfortunately that is exactly what has ensued.

Another run at the charts will provide some guidance as to potential outcomes for SMF.

The three-year chart depicts the long decline from the 2010 highs. The downtrend was briefly broken in June of 2011, but by October a new retreat had begun. The base building along $7.00 was breached in December of 2011 and attempts to move higher have met resistance along both the 50 and 200-day moving averages.

The six-month chart illustrates the opportunity to trade SMF for profit but you have to keep in mind that there is an established downtrend in play and there is a death cross on the chart. Overall I would monitor the RSI and MACD for buy and sell signals if you decide to take a run at this one.

At this moment it appears to be a struggle to hold support at $6.00 and that the RSI and MACD are turning up which are suggesting that a trade is setting up. Watch for resistance along the 50-day moving average at $6.85.



Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

Visit his website

 
Security Price Change
SMF-T Semafo Inc. 4.23 0.40
10.444 %
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